Outsourcing Slowing Down Job Creation: Survey

Houston, April 10 | Updated: Apr 11 2004, 05:30am hrs

Workforce reductions in the American technology sector, which fell to a three-year low during the first quarter, could be partly attributed to oustourcing which is slowing job creation, according to a a new survey. The first-quarter job cuts in the high-tech sector, which includes telecommunications, electronics, computer and e-commerce, were 64 per cent lower than the 82,328 cuts announced during the previous quarter and 52 per cent lower than the first quarter of 2003 (61,032), says a survey conducted by the Chicago-based Challenger, Gray and Christmas Inc.

This may not mean that telecom is the weakest of the technology industries, but it is clearly the most volatile. While some areas in this industry are consolidating, others are expanding, said John Challenger, CEO of the company said in a statement here on Saturday.

Overall, technology job cuts appear to be waning, a trend which may temper some of the increasingly heated debate over the controversial practice of offshore outsourcing. However, while the latest survey data show that offshore outsourcing is not leading to a surge in job-cut announcements, one can still argue that it is slowing job creation in technology, he said. According to the survey of the Silicon Valley venture capital firms on employment trends, technology start-ups face difficulty getting off the ground if they dont outsource some company functions.

One company calculated the monthly cost of keeping one tech employee in the Silicon Valley at $15,000; a worker with the same skills, responsibilities and job package will cost $2,500 a month in New Delhi.